Tencent Stock Predictions: Tencent Is The Best Bet On The Fast-Growing Video Games Industry

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

TCTZF Stock Prediction


  • Europe is the first to get the beta or soft-launched English version of Tencent’s King of Glory mobile game. Tencent rebranded it as Strike of Kings.
  • King of Glory, also known as Honor of Kings, is generating 2 to 3 billion yuan in monthly gross sales in China. That’s $295 million to $435 million.
  • The international release could help King of Glory double up its monthly gross sales. Two years from now King of Glory and its English version could contribute gross sales of $4 billion annually.
  • Tencent’s leadership in both PC and mobile games revenue makes it the best bet on the fast-growing video games business.
  • TCTZF has strong buy signals based on its short and long-term market trend algorithmic forecasts.

Tencent (TCTZF) deserves to be in the portfolio of long-term growth investors. For several years now, Tencent remains the world’s biggest video games publisher. Tencent’s $8.6 billion purchase of Supercell last year made it the undisputed king in mobile games revenue. League of Legends and CrossFire also remains the two most profitable PC games. Tencent owns League of Legends and CrossFire.

Tencent’s leadership in video games is assured when League of Legends can do annual sales of $1.8 billion. CrossFire had sales of $1.1 billion last year. Tencent’s attractiveness as a long-term investment is also because a large part of its $10.2 billion revenue from games last year came from smartphones. This is thanks to Supercell’s cash cow games, Clash Royale and Clash of Clans. Supercell’s revenue last was $2.77 billion. In China, Tencent also owns almost half of all the top-grossing iPhone/Android games.

(Source: Newzoo)

Tencent’s double leadership in PC games and mobile games global sales is why you should buy and hold this stock. In my book, Tencent is a better long-term growth investment than Activision (ATVI) or Electronic Arts (EA). You want to own a piece of the company that’s taking the biggest pie out of the $109 billion/year video games industry.

The PC and Mobile segment, where Tencent is the clear leader, are the biggest revenue generators of the video games industry.

Tencent Knows How To Monetize Its PC Games On Mobile Too

Tencent was really smart to port its top-grossing PC game League of Legends to mobile. I expect Tencent to post record revenue again this year from mobile games. Its China-only King of Glory (also known as Honor of Kings) mobile MOBA game touts monthly gross sales of 2 to 3 billion yuan ($295 million – $435 million).

That massive cash flow of King of Glory is just from players in China. Yes, sir. King of Glory or Honor of Kings was a clone of League of Legends. It was just optimized to run on iOS and Android phones/tablets. Tencent also wisely decided not to call it League of Legends Mobile. King of Glory did not affect or cannibalize monetization from PC players of League of Legends.

Monetizing King Of Glory Franchise Outside China

Tencent now apparently wants to expand King of Glory’s China success to Europe. Half of the top 10 countries with most video games revenue are in Europe. It makes perfect sense that Tencent will choose Europe as its first acid test for the English version of King of Glory. If it proves to be a hit in Europe, King of Glory could then be expanded to the United States and Canada.

(Source: Newzoo)

Strike of Kings (the English version of King of Glory) has been soft-launched in select European countries. Strike of Kings is a 1:1 English conversion of King of Glory. However, Tencent has licensed DC Comics heroes like Batman as additional heroes for Strike of Kings.

This should really help Strike of Kings appeal better to European mobile gamers. Europe is one of the most lucrative market for video games.

By using DC heroes like Superman and Joker, Tencent hopes to differentiate Strike of Kings against Mobile Legends. Mobile Legends (which I play regularly) is currently the world’s top-grossing English 5-versus-5 freemium MOBA mobile game. Like Strike of Kings/King of Glory, Mobile Legends is also an iOS/Android rip-off of League of Legends.

Mobile Legends international success means there really is a ready market for mobile-friendly MOBA games like League of Legends and DOTA 2. Tencent’s decision to release an English version of King of Glory is therefore timely.


The video games industry is still a growing business that all investors should be part of. Tencent deserves a spot in your portfolios. This Chinese company’s leadership in PC and mobile games is still growing. The huge operating income in owning the world’s top-grossing PC and mobile games is helping Tencent’s acquisition spree.

Tencent recently invested $90 million in mobile game developer Pocket Gems. Pocket Gems is behind the hit mobile title War Dragons that’s netting monthly sales of $4 million just from iOS devices. My bet is that Tencent might just create a Chinese version of War Dragons and publish it in China.

My buy rating for Tencent’s stock is backed by its positive algorithmic forecasts from I Know First. The 30-day, 3-month, and one-year market trend signal scores are all above +100. TCTZF therefore has a high probability of going up in price within the next 12 months.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Past I Know First Success With TCTZF

I Know First has been bullish on TCTZF shares in past forecasts. In one such case, on May 13, 2016, I know First issued a bullish forecast on TCTZF in “Top 10 Tech stocks for the long position.” Since then, TCTZF shares have gained an impressive 68.34%. This vastly surpassed the S&P 500 yield of 15.83%. That is a market premium of 52.51%.

(Source: Yahoo.com)

This bullish forecast for TCTZF  was sent to I Know First subscribers on May 14, 2016. To subscribe today click here.